ASSESSMENT OF VALUE ADDED TAX ADMINISTRATION - THE CASE OF ADDIS ABABA No.2 MEDIUM TAXPAYERS BRANCH OFFICE BY SARA GEBEYEHU

Abstract

The general objective of this research was to assess the current VAT Administration of the Addis Ababa No. 2 Medium Taxpayers Branch office. Thus, it is a descriptive type of research. Both qualitative and quantitative data analysis techniques were used. Primary data were obtained with the help of questionnaire and interview from VAT registrants and concerned tax officials. Convenience and purposive sampling techniques were used to select appropriate and representative sample size from VAT registrants and tax officials respectively as a result, from 5,000 VAT registrants 357 samples were selected and from 74 tax officials whose activity is directly related to Value Added Tax assessment and collection 22 samples were selected. Secondary data were obtained from the collection; audit, enforcement and refund performance reports of the branch. Tables, percentages and graphs were used for data analysis. From the outcome of the study the major obstacles that hinder VAT Administration are low rate of voluntary compliance, lack of taxpayers awareness, shortage of well trained employees, especially in relation to operating the computer program which creates difficulty in differentiating non-filers from stop filers and affects the follow-up and controlling activities, relatively low rate of audit and enforcement, weak filing and payment system. Therefore, the following points are recommended. Develop taxpayers awareness to increase voluntary compliance, provide training for employees, modernize the service delivery in relation to filing and payment, strengthen audit and enforcement capacity of the branch office.